Shaky Project Financing is Returning
Just yesterday I was discussing why general contractors need to ensure that their clients have proper funding to support a project. If the owner is not properly funded, then the general contractor is at risk of not being paid for performed work. After that lecture, I read an article in Bloomberg about how risky lending is back for office, mall and hotel projects. The increase in interest only (IO) and part ion IO lending is on the rise.
If the project owner has financing, regardless of the type, that's good for contractors and issues with shaky financing may not be an issue until after the project is completed and principle payments or the balloon payment is due. But contractors should still be aware of the type of project funding mechanism and the financial strength of the owner and bid projects accordingly. Be very weary of owners with weak financial backing.
12/3/2013 12:37:25 pm
It could be viewed as positive news for the construction industry that there's more lenders taking risks with the kinds of financing you mentioned. Hopefully the memory of the 2009 financial meltdown that was caused by risky lending hasn't faded so much that we journey there again. I work for a large multinational contractor that requires credit reports and financial statements from our potential customers during early stages of the construction relationship. Equally important is the lender's history and understanding of construction finance. Thanks for the article.
12/5/2013 01:49:18 am
Your project now have financial stability. It's very good to hear
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